On July 4, 2017, W. Va. Code § 46A-5-108 went into effect, requiring West Virginia consumers to send a written “Notice of Right to Cure” to a creditor or debt collector prior to instituting any action under Articles 2, 3, or 4 of the West Virginia Consumer Credit and Protection Act (the WVCCPA).  The full text of the current statute can be accessed here. 

After receipt of the Notice of Right to Cure, creditors and debt collectors are provided 45 days to send a cure offer to the consumer.  If the consumer accepts the cure offer and the offer is performed, it is a complete bar to recovery if a consumer later files a cause of action for the alleged violation.  Likewise, if the court finds that a cure offer is timely delivered and above the judgment that a consumer receives, the consumer’s counsel is barred from collecting attorneys fees and costs incurred following delivery of the cure offer. 

Implementation of the pre-suit notice requirement has raised multiple questions for courts and creditors alike.  Although intended to add clarity and to enable creditors to address any potential errors or violations of the WVCCPA, the provision has created more questions than answers, and it remains to be seen if the intent to allow creditors and consumers to avoid costly and time-consuming litigation will be realized. 

First, the statute is silent on whether a consumer can first file suit and then send the Notice of Right to Cure, requiring the creditor to then send a cure offer in 20 days under the provisions set forth in subsection (a) of § 5-108.  It appears that the legislature only intended this provision to apply when the creditor has filed a suit and the consumer is the would-be defendant.  However, as § 5-108 currently reads, the lack of clarity in the statute has been seen as an invitation for the consumer to engage in such conduct. 

Second, the effect the statute will have on individual claims for potential class representatives is still unknown.  Can the consumer demand a settlement on behalf of a class prior to class certification?  What is the effect of a rejected cure offer to a class representative’s claim if he or she does not individually recover a judgment above the individual cure offer amount?  Are creditors and/or debt collectors required to address potential class claims in a cure offer?  Once a class is certified, does the creditor or debt collector have an opportunity to send a classwide cure offer to all potential class members?  To date, these questions remain unanswered. 

Third, internal compliance procedures for companies conducting business in West Virginia should be updated to ensure that consumer notices are being addressed by either their legal departments or by referring the potential claim to their outside counsel to address and make recommendations to evaluate and respond to § 5-108 correspondence from consumers. 

The Financial Services Litigation group at Troutman Sanders has handled hundreds of contested matters in West Virginia, including class action cases, and arbitrations through appeal to the Fourth Circuit.  We will continue to monitor the effects of § 5-108 in West Virginia federal and state courts to identify and advise on new compliance risks and strategies.